Genting Singapore to sell Jeju interest for $420m

Casino operator Genting Singapore is selling its Korean resort interests in order to focus on its Singapore business and save resources for potential opportunities in Japan.

According to a filing from the company on Friday, Genting Singapore’s subsidiary Algona Pte. Ltd. entered into a conditional sale and purchase agreement with Landing International Development Ltd. to dispose of its 100 percent interest in Callisto Business Ltd. for a consideration of approximately $420 million.

Callisto’s subsidiary owns 50 percent of Landing Jeju Development Co., Ltd, which is developing an integrated resort in Jeju Korea.

“The group has narrated its shift to focus on different market segments, and has been developing strategies to improve offerings to the affluent target markets. These strategies, including the group’s brand repositioning and development of new facilities, will help it grow within its home base in the near term,” said the company in a filing.

“Recent news reports from Japan are encouraging with regards to the advancement of the process to debate and pass the Integrated Resort Promotion Bill. The Group is optimistic that this Bill will be enacted in the near future. When this happens, significant resources will need to be devoted to position the group as a strong candidate for the bidding process.”

“GENS had entered the Korean market with much fanfare and hoped that Jeju would replicate its success in Singapore, where duopoly structure and lower taxes allowed the company to generate high profit margin,” commented Morgan Stanley in a note on Monday. The brokerage noted the “decision to exit Jeju Korea [was] a neutral event,” but noted “incremental cash income, recent news of interim dividend, and focused approach on Singapore business bode well for the operation.”

 Additionally, Genting International Resorts Management Ltd, a subsidiary of Genting Singapore has entered into a conditional sale and purchase agreement with Landing International Development Ltd. to dispose of its 50 percent shareholding in Autumnglow Pte Ltd for S$1.

Proforma gains on the Callisto and Autumnglow disposals are approximately S$81 million and S$4 billion respectively.

The sales will occur simultaneously and are expected to be completed in 17Q1, conditional upon shareholders’ approval.